Florida Worker Pension Changes Are Legal, Court Rules

Jan. 17 (Bloomberg) -- Florida’s changes to its public-employee pension system didn’t violate government workers’
constitutional rights, the state Supreme Court ruled in a
victory for Republican Governor Rick Scott.

Lawmakers properly moved to change future pension benefits
and require workers to contribute to their retirements to save
$1 billion and help close a budget shortfall, a divided court
concluded in a 48-page ruling today.

Florida lawmakers backed Republican-led changes to the
pension system to deal with a $3.6 billion budget gap. They
approved a measure requiring workers to contribute 3 percent of
their pay and eliminated the system’s cost-of-living adjustment
for employees retiring after the law took effect.

Florida law doesn’t bar lawmakers “from prospectively
altering benefits for future service” by state workers, the
court ruled in a 4-3 decision.

The savings were shifted to the Florida Retirement System,
which covers more than 650,000 state employees, saving general
fund money for use in other programs. The change saved the state
an estimated $1 billion for the 2011 budget year and saved local
governments $600 million.

“The court’s ruling today supports our efforts to lower
the cost of living for Florida families,” Scott said in an
e-mailed statement. “This means even more businesses will
locate and grow in our state.”

Salary Cut

Workers argued that the pension-reform measure amounted to
an illegal salary cut and a violation of collective-bargaining
rights under existing union contracts.

Eleven public employees covered by the $120 billion pension
system sued Scott and other Florida officials over the changes
to their retirement plan. The employees include members of
AFSCME Florida, the Florida Police Benevolent Association and
the Florida Education Association.

Alma Gonzalez, an AFSCME attorney and spokeswoman, didn’t
immediately return a call for comment today about the pension
ruling.

“Balancing the state budget on the backs of middle-class
working families is the wrong approach,” Andy Ford, president
of the Florida Education Association, said in a e-mailed
statement. The group represents the state’s teachers. “We’re
disappointed that the state’s highest court said this approach
was legal,” Ford said.

Judge’s Order

Judge Jackie Fulford in Tallahassee concluded in March that
the pension-law changes violated the state’s agreements with
government employees and ordered contributions returned with
interest.

The law amounted to an “unconstitutional taking of private
property without full compensation and an abridgment of the
rights of public employees to collectively bargain over
conditions of employment,” Fulford ruled.

The majority of the state’s highest court concluded that
Fulford erred in finding that lawmakers didn’t have the power
under Florida’s Constitution to change pension laws that apply
to government workers.

The state’s pension law “does not create binding contract
rights for existing employees to future retirement benefits,”
Justice Jorge Labarga wrote in the 22-page majority decision.

Collective Bargaining

The judges also found that there was no evidence that
changes to the pension law meant that government worker’s rights
to “effective collective bargaining has been abridged or
impaired.”

Three Florida Supreme Court justices dissented in the case,
arguing that the changes to pension law improperly altered
existing contracts and should be struck down.

The revisions “impair vested contract rights, and such
impairment is substantial,” Justice R. Fred Lewis wrote in a
19-page dissent.

“All public employees including teachers, first
responders, deputies, correctional officers, nurses and social
workers” had their contract rights violated by the pension
changes, Lewis said.